Germany's government hiked its growth forecast for 2011 on Thursday, saying rising spending among consumers less worried about losing their jobs marked a turning point that had put the expansion on a strong footing.
Berlin said it now saw growth of 2.6% compared with earlier expectations of 2.3%, also forecasting numbers of Germans in work would hit a record 41 mln in 2012 while households' disposable income would rise by 3.3% this year and next.
The predictions will serve as the basis for tax revenue estimates due in mid-May.
"Germany's almost traditional weakness in domestic consumption has been overcome. Growth in private consumption is significantly over that of the past decades," Economy Minister Rainer Bruederle told a media briefing.
Europe's largest economy recovered faster than expected from its deepest post World War Two recession and economic indicators show it is on a strong growth path, shrugging off the sovereign debt crisis affecting other parts of the euro zone.
"People have regained their confidence in the future," Bruederle said.
Based on assumptions of crude oil at an average of $115 per barrel, consumer prices will rise 2.4% in 2011, moderating to 1.9% inflation in 2012, the government said.
It forecast 2012 growth at 1.8% and said it expected growth to average around 1.75% per year through 2015.
STRONG BASE
The growth upgrade puts the government's estimate closer to that of the country's top economic research institutes, which point to 2.8% growth in 2011 and 2.0% in 2012.
Investor morale has weakened in recent weeks due to Japan's twin catastrophes and unrest in the Middle East, but concrete indicators continue to point to strong growth.
Earlier in April, the government reported growth in industrial orders and production data for February that far exceeded expectations. It also said unemployment fell in March to its lowest level in two decades.
Imports are also booming. In the two months to February, imports from countries in the European Union rose 21.2% in unadjusted terms compared with the same period in 2010.
Economists have identified the main risks to continued growth as rising energy prices, unrest in the Arab region, the nuclear disaster in Japan and the euro zone sovereign debt crisis.
